NetDragon Websoft (777) H1 2025 earnings summary

Executive summary

• Revenue for H1 2025 was RMB2.4 billion, down 27.9% YoY, with gaming and application services stabilizing after short-term declines and Mynd.ai facing significant headwinds from tariffs and demand softness.

• Operating expenses fell 15.6% YoY due to cost optimization, with full impact expected in H2 2025, supporting future profitability.

• Interim dividend of HKD0.50 per share declared, up 25% YoY, with a commitment to distribute at least HKD600 million to shareholders over the next 12 months via dividends and buybacks.

• Strategic focus on AI-driven growth in gaming and education, including new product launches, international expansion, and acquisition of AI voice assistant technology.

• AI-driven cost optimization and innovation, with R&D expenses in Gaming and Application Services down 26.7% YoY.

Financial highlights

• Group revenue: RMB2.4 billion, -27.9% YoY; gross profit: RMB1.7 billion, -24.7% YoY; gross margin up 2.9 pts to 69.5%.

• Gaming and application services revenue: RMB1.7 billion (-18.1% YoY, -4.3% HoH); Mynd.ai revenue: RMB641 million (-45.7% YoY).

• Profit attributable to owners: RMB30 million, -92.5% YoY, impacted by impairment loss and one-off staff optimization costs; adjusted profit decline narrowed excluding these items.

• Operating expenses: RMB1.4 billion, -15.6% YoY.

• Interim dividend per share raised to HKD0.50, up 25% YoY.

Outlook and guidance

• Full impact of cost reductions expected in H2 2025, supporting a return to profitability.

• Continued investment in AI, gaming, and education technology, with new product launches and international expansion planned.

• Shareholder return program to distribute at least HKD600 million over 12 months via dividends and share repurchases.

• Confident in business prospects for 2025 and 2026, with expectations of market recovery in Europe and the US.

• Mynd.ai expects EBITDA breakeven in Q4 and profitability in 2026, with continued cost optimization and SaaS enhancement.